Wall Street and others are continuing to weigh in on Medtronic Inc.’s pending $700 million buy of Irvine device maker CoreValve Inc.
Medtronic, which employs some 550 people at its Santa Ana heart valve plant, said late last month that it was buying CoreValve to get a deeper foothold in the race to come out with heart valves that don’t require major surgery.
The buy catapults CoreValve, which has $35 million in annual sales and makes a valve and catheter that’s inserted through an artery in the groin, into stepped up competition with Irvine-based Edwards Lifesciences Corp.
CoreValve is “exactly the type of acquisition that (Medtronic) should be making, focusing on attractive, emerging technologies,” said Greg Simpson, a medical device analyst with Stifel, Nicolaus & Co. in St. Louis.
The analyst also thought that Medtronic may have overpaid for CoreValve.
“There were definitely other parties interested in CoreValve, but apparently Medtronic was willing to pay quite a bit more than the others,” he said.
Edwards got into catheter valves in 2003 when it paid $125 million for New Jersey startup Percutaneous Valve Technologies Inc.
Edwards, too, may have overpaid, according to Simpson, “given the number of implants and stage of development at the time,” he said.
But Edwards “has done a great job with that technology over the last four to five years, which is why it is where it is today,” he said.
CoreValve is “definitely behind” Edwards in its development of its heart valve, Simpson said.
Edwards’ less-invasive Sapien valve is in U.S. clinical trials with an eye toward a 2011 launch. The device already is used in Europe and had $53 million in 2008 sales.
CoreValve’s product also is sold in Europe. Medtronic doesn’t expect it to be sold here until 2014.
But “timing isn’t that critical,” Simpson said. “Being second to market in a significant market will not be a bad thing for Medtronic, assuming they have the right technology. So I think Edwards will maintain its leadership in terms of timing, with Medtronic, St. Jude Medical Inc. and others following them in the U.S.”
CoreValve’s sale also is expected to net a large payout for CoreValve’s investors, including Sofinnova Partners, a French venture capital firm.
Sofinnova rejected several offers to sell CoreValve a year ago, Antoine Papiernik, Sofinnova’s managing partner, told the Financial Times.
The Medtronic deal could generate more than 10 times Sofinnova’s investment in CoreValve, according to Papiernik.
Sofinnova was the sole participant in CoreValve’s first $5.7 million round of financing in 2003.
New Name for Advanced Medical
Illinois-based Abbott Laboratories, parent company of Santa Ana-based Advanced Medical Optics Inc., was tapped by the Street.com as one of its top five growth stocks for last week.
Abbott’s buy of Advanced Medical, a local maker of eye surgery products and contact lens solutions, closed late last month.
Advanced Medical’s name has changed to Abbott Medical Optics, a move that allows Abbott to keep the AMO logo on bottles of contact lens solutions.
The Street.com has rated Abbott as a buy since 2007, based on its revenue and profit growth, earnings per share growth and expanding product margins.
The Web site noted that Abbott is on target for double-digit sales growth this year and has confirmed its previous forecast of $5.7 billion to $5.73 billion in revenue in 2009.
While Abbott’s stock “has shown rather lackluster performance recently,” the Web site said, Abbott’s strengths are enough to balance any potential weaknesses.
Abbott’s shares have been down about 10% in the past three months with a recent market value of $72 billion.
Bits and Pieces:
Irvine drug maker Spectrum Pharmaceuticals Inc. added three managers: Andrew Sandler, chief medical officer; Michael Adam, senior vice president of pharmaceutical operations; and Amar Singh, chief commercial officer. Spectrum said the appointments follow the retirements of Gino Lenaz, who was chief scientific officer and Ashok Gore, who was senior vice president of pharmaceutical operations and regulatory compliance Richard Kozak, an emergency room physician, is the new chief of staff at Mission Hospital in Mission Viejo. Kozak succeeds Marvin Posner at the St. Joseph Health System-owned hospital Lake Forest-based laser maker Trimedyne Inc. said it received a patent for its side-firing laser fiber. The fiber is going to be marketed by Boston Scientific Corp. of Natick, Mass., in the U.S. and Japan and by Lumenis Ltd., an Israeli device maker, in the rest of the world Woodward Laboratories, an Aliso Viejo maker of foot care products, launched an at-home screening test for nail fungus.
